Investment risk is a fundamental concept that every investor should be familiar with. It refers to the possibility that an investment may not generate the expected returns or could even result in a loss of the principal. Risk is inherent in any investment because there are no guarantees in the financial markets.

When it comes to investing, it is important to understand that different investments carry different levels of risk. Generally, investments with higher potential returns also come with a higher level of risk. This is the trade-off that investors need to consider based on their own financial goals and risk tolerance.

To manage investment risk effectively, diversification is crucial. Spreading investments across multiple asset classes, industries, and geographic regions can help mitigate the concentration risk. By diversifying your investment portfolio, you can potentially reduce the impact of a single investment's poor performance on your overall portfolio.